China's wealthy are moving to the U.S. in rising numbers. This banking startup hopes to capitalize on the migration.
Sun Pacific Bank, which is still in the regulatory approval process in the U.S., hopes to cater specifically to high-net-worth mainlanders heading to sunny California.
"We are playing into the cultural difference between people from Taiwan, Hong Kong and mainland Chinese," Chen Wei, the bank's chairman and co-founder, told CNBC Wednesday. "Most of the Chinese banks based in Los Angeles right now are either funded by Hong Kong or Taiwan 20 or 30 years ago."
Among issues a mainlander might face, taking money out of China can be complex on a regulatory basis.
Chen believes the migration of mainland Chinese to the U.S. is set to be a major trend over the next 10 to 15 years, citing their dominance of the EB-5 immigration program. That program provides 10,000 visas annually to foreigners heading to the U.S. - if they invest at least $500,000 and create at least 10 jobs. Last year, around 85 percent of those visas went to mainland Chinese.
Chen is hoping his bank will get to manage the assets of those immigrants, especially as Southern California is a popular destination due to its relative proximity to China and its already-established Chinese community.
"The Chinese economy started to plateau and (reach) saturation. We feel this is the beginning of the mainland Chinese trend to have global diversification for their assets, which they have been building the last 15 to 20 years," Chen said. "We have a very focused strategy to help them to settle down here, find them houses, expand their business, help their kids with their education and provide the high-touch service for high net worth individuals."
Rich Chinese have been flocking toward the mainland's exits. A study released in March by global real estate consultant Knight Frank with Fragomen, the immigration specialist for the wealthy, found that more Chinese millionaires were leaving their home country than millionaires in any other country. Between 2003 and 2013, 76,200 Chinese millionaires left, or about 15 percent of China's total millionaire population, the report said.
And there are signs that China's economic slowdown is spurring the country's wealthy to put assets overseas, particularly in the U.S. A small survey by FT Confidential, released in September, found that 61 percent of rich Chinese surveyed in July planned to boost overseas holdings over the next two years and almost half said they planned to offshore more than 30 percent of their fortunes. They indicated much of that investment would go into businesses, commercial investments and financial products.
Helping Chinese buy homes in the U.S. certainly looks promising: The National Association of Realtors said in July that Chinese buyers poured $28.6 billion into U.S. real estate in the past year. And they're willing to spend more. The average price of a home purchased by a Chinese buyer in the last year was $831,800, according to the Realtors association. That is four times the national median home price and far higher than any other international cohort's average purchase price.
But Sun Pacific Bank isn't just for any rich person.
"We are set up like a 'private club' banking style," Chen said, pointing toward the Bank Secrecy Act (BSA). That requires U.S. financial institutions to know their customers and report suspicious transactions, particularly relating to money laundering.
"We only service the high net worth individual which we already know through our investors and our board members so we are not actually just taking anybody from the street," Chen said. "We are actually going to do a lot of due diligence way before those mainland Chinese come to the U.S. and through our advisory board members and through our affiliates and to prepare them to be in the U.S."
Others have also noted that mainland Chinese are looking for guidance on making the leap outside their home country.
Kathy Sloane, a real estate agent with Brown Harris Stevens in Manhattan, recently returned from a real estate conference in China.
"Many Chinese signed up to come," Sloane told CNBC. "The Chinese buyer that was there, often brought their children. They are affluent. They want to know how to get their children into school and how to get health care for their parents. It's a package."
- Diana Olick and Robert Frank contributed to this report.